© PRESIDENT AND FELLOWS OF HARVARD COLLEGE Today’s and Tomorrow’s Housing Market: Conditions,...

© PRESIDENT AND FELLOWS OF HARVARD COLLEGE

Today’s and Tomorrow’s Housing Market:

Conditions, Needs, and Policy Choices

Chris Herbert

NCSHA Annual Conference

Boston, MA

October 21, 2014


Rental Markets


Renting Has Increased Sharply Across Most Age Group Over the Last 10 Years

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Source: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys.

Age of Household Head


Generating a Surge in Renter Household Growth

Note: Renter growth in 2013 in the HVS was calculated by averaging the number of renters in the first and second quarters of 2013 and subtracting the average number of renters in the first and second quarters of 2012.Source: JCHS tabulations of US Census Bureau, Decennial Censuses, Current Population Surveys(CPS), and Housing Vacancy Surveys(HVS).

Average Annual Growth in Renter Households (Millions)


And a Strong Recovery in Multifamily Construction While Single-Family Building Remains Depressed

Note: Levels shown are seasonally adjusted annual rates averaged over 12 months to reduce volatility.Source: JCHS tabulations of US Census Bureau, New Residential Construction data.


In Fact, Most of the Recent Increase in Rental Supply Has Come from Single-Family Homes

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Note: Other units include mobile homes, trailers, boats, recreational vehicles, and vans.Source: US Census Bureau, 2006 and 2012 American Community Surveys.


Supply Appears to be Catching Up With Demand

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Notes: Data cover investment-grade multifamily properties. Completions and changes in occupied units are four-quarter totals.Source: JCHS tabulations of MPF Research data.

Units (Thousands)


Strong Rental Demand Has Pushed Up Rents Even as Renter Incomes Have Fallen Steadily

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Percent Change in Real Median Value Since 2001

Notes: Values are adjusted for inflation by the CPI-U for All Items. Data exclude renters paying no cash rent.Source: JCHS tabulations of US Census Bureau, American Community Surveys.


Renter Cost Burdens Spread at an Unprecedented Pace in the 2000s

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Notes: Moderate (severe) burdens are defined as housing costs of 30-50% (more than 50%) of household income. Households with zero or negative income are assumed to be severely burdened, while renters not paying cash rent are assumed to be unburdened. Sources: JCHS tabulations of US Census Bureau, Decennial Census and American Community Surveys.

Shares of Cost-Burdened Renter Households (Percent)


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Notes: Housing cost burdens are defined as housing costs of more than 30% of household income. Households with zero or negative income are assumed to be burdened, while renters paying no cash rent are assumed to be without burdens. Source: JCHS tabulations of US Census Bureau, 2012 American Community Survey.

Renter Cost Burdens Are Worse on the Coasts But Very High in Markets Across the Country


Few Lowest Income Renters Escape Severe Burdens As Problems Creep Up the Income Scale

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Notes: Moderate (severe) burdens are defined as housing costs of 30–50% (more than 50%) of household income. Households with zero or negative income are assumed to be severely burdened, while renters not paying cash rent are assumed to be unburdened. Source: JCHS tabulations of US Census Bureau, American Community Surveys.

Share of Renter Households (Percent)

Under $15,000

$15,000- 29,999

$30,000- 44,999

$45,000- 74,999

$75,000 and Over


Very High Shares of Lowest Income Renters Are Cost Burdened Everywhere, But Creep Up in the Income Scale in High Cost Markets

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Severely Cost Burdened Renters (Percent)

Notes: Severe cost burdens are defined as housing costs of more than 50% of household income. Households with zero or negative income are assumed to be severely burdened, while renters not paying cash rent are assumed to be unburdened. Source: JCHS tabulations of US Census Bureau, American Community Survey, 2012.


Affordable Supply Gap For Extremely Low-Income Renters Continues to Widen

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Note: Extremely low-income is defined as less than 30% of area median income.Source: US Department of Housing and Urban Development, Worst Case Housing Needs Reports.


As the Number of Very Low-Income Renters Has Grown, the Likelihood of Getting Assistance Has Fallen

Note: Worst case housing needs are defined as renters with very low incomes (below half the median in their area) who do not receive government housing assistance and who either paid more than half their monthly incomes for rent, lived in severely substandard conditions, or both. Source: US Department of Housing and Urban Development, Worst Case Housing Needs Reports to Congress.

Very Low Income Renter Households (Millions) Share with Assistance (Percent)


Nearly Two Million Assisted Rentals Are at Risk of Loss from the Affordable Stock

Notes: Other units include those with HOME Rental Assistance, FHA insurance, Section 202 Direct Loans, USDA Section 515 Rural Rental Housing Loans, USDA Section 538 Guaranteed Rural Rental Housing Program, and State Housing Finance Agency Funded Section 236. Data include properties with active subsidies as of May 16, 2014. Source: National Housing Preservation Database.


Tax Credits Are Key Hope for Preservation And Necessary to Develop Rentals At More

Affordable Price Points


Homeownership


The Homeownership Rate Continues to Drift Downward along with the Number of Owners

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Source: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys.


House Prices Continue to Recover, Having Gained Back More than 60% of Their Losses

Single-family house price index (Jan. 2000=100)

Source: CoreLogic National House Price Index (HPI), Single family attached and detached structures as of July, 2014

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The Number of Underwater Properties Has Fallen Substantially, But Remains High

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Residential Properties with Negative Equity (Millions)

Source: CoreLogic Equity Report, First Quarter 2014.


Serious Delinquencies and Foreclosure Inventories Have Been Cut in Half, But Still Well Above Normal

Source: JCHS tabulations of Mortgage Bankers Association, National Delinquency Surveys.


Minority and Low-Income Neighborhoods Have Higher Shares of Homeowners with Negative Equity

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Share of Mortgaged Homes with Negative Equity (Percent)

Poverty Rate

Notes: Negative equity homes have mortgage balances that exceed current home values. Negative equity shares are averaged across neighborhoods. Neighborhoods are defined by zip codes and include 11,572 areas with at least 500 residents and with data available from 2000 to 2013. Minority (mixed/white) neighborhoods were more than 50% (10–50%/less than 10%) minority in 2012. High- (moderate-/low-) poverty neighborhoods had poverty rates of more than 20% (10–20%/ less than 10%) in 2012.Source: JCHS tabulations of Zillow® Real Estate Research and US Census Bureau, 2008-2012 American Community Survey 5-Year estimates.


Median Housing Wealth as a Share of Household Net Worth (Percent)

Notes: Data exclude renters and households with zero or negative income. Income quartiles are equal fourths of all households ranked by income. White, black and other households are non-Hispanic; Hispanic households can be of any race.Source: JCHS tabulations of Federal Reserve Board, 2010 Survey of Consumer Finances.

Homeownership Remains an Important Source of Wealth for Low-Income and Minority Households


And a Fundamental Goal of People at All Ages

Source: Drew and Herbert, 2012. Based on Fannie Mae National Housing Survey 2010-2012.


Offering Some Hope for a Turnaround in Homeownership, Mortgage Payments Remain Affordable Relative to Rents

Notes: Monthly mortgage payments based on median existing home price from NAR ® and assumes 20% downpayment and a 30-year fixed-rate mortgage from Freddie Mac. The monthly gross rent is the median gross rent from the 2012 American Community Survey indexed to the Consumer Price Index for Rent of Primary Residence. Both series are adjusted for inflation to 2014:2 dollars using the CPI-U for All Items.Source: JCHS tabulations of Freddie Mac, Primary Mortgage Market Survey; National Association of Realtors ®, US Census Bureau, 2012 American Community Survey; and US Bureau of Economic Analysis, Consumer Price Indices.

Real Monthly Housing Costs (2014:2 dollars)


But Access to Credit Has Tightened for Low Credit Score Borrowers

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Note: Loans with missing credit score data were excluded.Source: JCHS tabulations of CoreLogic data.


Declining Incomes Among Younger Households Key Factor in Homeownership Trends

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Note: Incomes are adjusted for inflation by the CPI-U for All Items.

Source: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys and Current Population Surveys.

25–34 Year Olds 35–44 Year Olds


Student Loan Debt Burdens More Common, But Heavy Burdens are Concentrated in a Few Borrowers

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Note: Debt amounts are constant 2010 dollars.Source: Joint Center tabulations of Survey of Consumer Finances.

Median Debt ($000s) Average Debt ($000s)Percent with Debt


Minorities Account for Nearly Half of Younger Households and Much of the Coming Growth

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Age Under 30


Substantial Gaps in Homeownership by Race and Ethnicity Remain After Two Decades of Ups and Downs

Source: JCHS tabulations of US Census Bureau, Current Population Surveys.


Renters Have Minimal Savings and Wealth So Need Low Downpayment Loans

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Notes: Data for Renters only. Cash savings includes checking, saving, CD and money market accounts.Source: JCHS tabulations of 2010 Survey of Consumer Finances.

Cash Savings (Thousands of dollars) Total Net Wealth (Thousands of dollars)


Median Credit Scores Vary by Race and Income, So Credit Score Cutoffs Also Matter

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Median credit score among all households, 2001

Source: Bostic, R., P. Calem and S. Wachter. (2003) Hitting the Wall: Credit as an Impediment to Homeownership, November 13, Working Draft.


Housing Older Americans


The Older Population Is on Track to Increase Dramatically

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Source: US Census Bureau, Decennial Censuses and 2012 National Population Projections (middle series).

Population by Age Group (Millions)


Households Owning Their Homes Outright Are Much Less Likely to Be Cost Burdened

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Share of Households by Age Group (Percent)

Source: JCHS tabulations of US Census Bureau, 2012 American Community Survey.


Rapid Growth in Older Eligible Renters Will Put Even More Pressure on Housing Assistance Programs Very Low-Income Renter Households Aged 62 and Over (Millions)

Sources: JCHS tabulations of US Department of Housing and Urban Development, Worst Case Needs Reports to Congress, and JCHS 2013 Household Projections.


By Age 80, Adults Are Far More Likely to Have Disabilities than to Live in Accessible Homes

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Source: JCHS tabulations of US Department of Housing and Urban Development, 2011 American Housing Survey, and US Census Bureau, 2012 American Community Survey.

Shares of Housing Units and Population with Disabilities by Age Group (Percent)


Cost of Long-Term Services and Supports Are Quite High—Out of Reach for Most Renters Without Subsidies

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Sources: 2014 Genworth Cost of Care Survey.

Median Monthly Cost

© PRESIDENT AND FELLOWS OF HARVARD COLLEGE Today’s and Tomorrow’s Housing Market: Conditions,...

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